The presentation will take place on Wednesday,
October 04, 2023, at 9:30am PT
Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it will be presenting at the LD Micro Main Event XVI (the “Event”). The Event will take place in Los Angeles, from October 03, 2023 to October 05, 2023, and Verde will be represented by its Founder, President & CEO, Mr Cristiano Veloso.
The three-day Event will feature around 200 companies, presenting in half-hour increments, and attending private meetings with investors.
Register to watch the virtual presentation using the link below:
Verde has commissioned an independent mineral resource and reserve study under the Canadian National Instrument 43-101, which has established a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[1] Thus, Verde’s mining sites hold Brazil’s largest identified potash deposit.
Verde currently operates two production plants, along with a biomanufacturing facility for producing fertilizers with microorganism input additives. This establishes the Company as Brazil’s largest potash producer by capacity, with an installed production capacity of 3.00 million tonnes per year.
With Verde’s two production plants already in operation and no further need for CAPEX investment, operating at full capacity and assuming a sales volume of 3 million tonnes of product per year, the Company expects to achieve a 28% EBITDA of C$88 million and earnings per share of C$1.00.[2]
In addition to its production plants, the Company also operates three research laboratories, focusing on Microbiology, Mineralogy, and Agronomy.
Verde’s Carbon Capture Potential
Verde has developed partnerships with British universities that are leaders in Soil Science[3] that have proven Verde’s K Forte® and Super Greensand® (“Products”) have the potential to capture carbon dioxide (“CO2”) from the atmosphere through Enhanced Rock Weathering (“ERW”), while releasing potassium and other plant nutrients.
As detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist, the carbon dioxide capture properties of the Products are estimated at 120kg per tonne.[4] Therefore, the Company’s total 3.32 billion tonnes of resources have the potential to remove 0.40 gigatons of CO2 from the atmosphere.
With its installed annual production capacity of 3.00 million tonnes[5], Verde expects to capture and offset up to 0.36 million tonnes of CO2 per year. The Company plans to deliver its whole CO2 capture capacity to the market to be sold as carbon credits.[6]
Investor day
Verde AgriTech will host an Investor Day on Monday, October 16, 2023, at 11:00 AM Eastern Time. The event will be held virtually and will feature presentations by the Company’s senior leadership team, providing updates on Verde’s strategy, followed by a Q&A session.
Subscribe using the link below and receive the event details by email:
Date: |
Monday, October 16, 2023 |
Time: |
11:00 am Eastern Time |
Subscription link: |
|
Detailed registration and event information will be available on Verde’s Investor Relations website.
Questions can be submitted in advance through the following link up to 2 hours before the event:
About Verde AgriTech
Verde is an agricultural technology company that produces potash fertilizers. Its purpose is to improve the health of all people and the planet. Rooting our solutions in nature, it makes agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[7] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[8] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[9] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[10].
Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[11]
About LD Micro
LD Micro, a wholly owned subsidiary of Freedom US Markets, was founded in 2006 with the sole purpose of being an independent resource in the micro-cap space. Through the LD Micro Index and annual investor
conferences, LD has served as an invaluable asset to all those interested in discovering the next generation of great companies. For more information on LD Micro, visit www.ldmicro.com (https://www.ldmicro.com/).
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/mjxisb9by2xbt5y2
Investors Newsletter
Subscribe to receive the Company’s updates at: http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
- the estimated amount and grade of Mineral Resources and Mineral Reserves;
- the estimated amount of CO2 removal per tonne of rock;
- the PFS representing a viable development option for the Project;
- estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
- the estimated amount of future production, both produced and sold;
- timing of disclosure for the PFS and recommendations from the Special Committee;
- the Company’s competitive position in Brazil and demand for potash; and,
- estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
- the presence of and continuity of resources and reserves at the Project at estimated grades;
- the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
- the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
- the capacities and durability of various machinery and equipment;
- the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
- appropriate discount rates applied to the cash flows in the economic analysis;
- tax rates and royalty rates applicable to the proposed mining operation;
- the availability of acceptable financing under assumed structure and costs;
- anticipated mining losses and dilution;
- reasonable contingency requirements;
- success in realizing proposed operations;
- receipt of permits and other regulatory approvals on acceptable terms; and
- the fulfilment of environmental assessment commitments and arrangements with local
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
For additional information please contact:
Cristiano Veloso, Founder, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.verde.ag | www.investor.verde.ag
[1] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2022. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf
[2] The financial projection is underpinned by the following assumptions: Average Brazilian Real to Canadian dollar exchange rate: C$1.00 = R$3.71. Average Brazilian Real to US dollar exchange rate: US$1.00 = R$5.00. Average KCl CFR Brazil price = US$350. Average Crude Oil price = US$90. Products sales mix: 2.4Mt of K Forte® Bulk (Plant 2), 0.3Mt of BAKS® 2S 0.2B (Plant 1) and 0.3Mt of K Forte® Bio Revolution (Plant 1). Sales channels mix: 50% of sales made by distributors, 30% made by sales agents and 20% as direct sales. Sales price does not consider any discount that may be applied regarding the KCl price.
[3] See “Verde’s Products Remove Carbon Dioxide From the Air” and “Verde’s Products Remove Carbon Dioxide from Air in Mere Months of Application”.
[4] See “Verde’s Products Remove Carbon Dioxide From the Air”.
[5] Verde is currently fully licensed to produce up to 2.8 million tonnes per year of its Products and has submitted mining and environmental applications for an additional 25 million tpy awaiting approval.
[6] One carbon credit is equivalent to one metric tonne of carbon dioxide captured.
[7] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
[8] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/
[9] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf
[10] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[11] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral
Newton Nagumo brings over two decades of successful communication and marketing planning expertise to boost Verde’s market strategy
Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce the appointment of marketing veteran Newton Nagumo to the position of Chief Marketing Officer (“CMO”). Mr. Nagumo is brand marketing leader with a 20-year track record of driving transformative innovation and guiding high-performing teams to achieve substantial growth for major Brazilian and global corporations. Mr. Nagumo will join Verde’s leadership team to oversee brand and product marketing, creative initiatives, consumer insights, and global communications.
As CMO, Mr. Nagumo will collaborate closely with the operations team to bolster sales efforts and will devise and execute strategies to fortify Verde’s position as one of the world’s largest carbon capture initiatives.[1]
In 2022, as the Chief Strategy Officer of a leading Brazilian marketing firm, Mr. Nagumo oversaw Verde’s rebranding strategy. During that occasion, he interviewed many of the Company’s customers and studied the sector and Verde’s main competitors.
“We are delighted to have Newton Nagumo’s competence and leadership at Verde to amplify our sales efforts and bolster the Company’s market reputation,” commented Mr. Veloso. “With his extensive brand experience, costumer-centric marketing approach, and ability to build and inspire teams, we are confident that he will propel Verde to the next level.”
Throughout his corporate journey, Mr. Nagumo held managerial and leadership roles overseeing strategic communication and marketing planning teams at renowned advertising agencies including Asia (a spin-off of Africa), Heads, JWT, Dentsu, W/Brasil, among others.[2] He has crafted comprehensive communication strategies and orchestrated successful campaigns for clients such as Nestlé, Johnson & Johnson, Unilever, Ford, Toyota, Renault, Braskem, and Mondelez. Furthermore, Mr. Nagumo presides over the Grupo de Planejamento,[3] a non-profit organization that brings together professionals specializing in brand and communication planning and strategy.
“I’m excited to take on the challenge and privilege of joining Verde at this key juncture in its trajectory. The Company has an explosive mix of ingredients in its carbon capture potential and sustainable agriculture nature that will allow it to take off in Brazil and the global stage,” affirmed Mr. Nagumo.
Mr. Nagumo holds postgraduate degrees in marketing and service management and a B.A. in advertising, both from the Escola Superior de Propaganda e Marketing, considered the leading institution for marketing and advertising education in Brazil.[4] He has also pursued specialized studies in controller and strategic business management, through various courses throughout his career at institutions such as the Miami Ad School and Hyper Island.
Corporate restructuring
As part of the corporate senior management restructuring strategy, the hiring of Mr. Nagumo represents another step in the Company’s commitment to establish a senior commercial team to support Verde’s growth plans. This senior team will shoulder the responsibility of steering the Company towards the milestone of 50 million tonnes of annual production, while concurrently working to expedite the development of one of the world’s largest carbon capture projects.
“After announcing our plans to enter the carbon markets through the sale of carbon credits,[5] Verde has reached a juncture where we need to enhance our corporate structure and bring on expanded expertise. As part of our corporate restructuring strategy, Verde plans to announce the hiring of a Chief Revenue Officer and a Vice-President of Corporate Development in the near future. These positions will also play a pivotal role in executing corporate decisions and strategies to blitzscale the Company’s growth,” explained Mr. Veloso.
Among their responsibilities, Verde’s CRO and VP of Corporate Development will oversee operational processes across the organization, identify avenues for improvement, refine project protocols in alignment with quality standards and business requirements, and chart new paths for revenue while building the necessary mechanisms to attain these goals.
About Verde AgriTech
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[6] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[7] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[8] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[9].
Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[10]
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/7r546idj7tphn478
Investors Newsletter
Subscribe to receive the Company’s updates at: http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
- the estimated amount and grade of Mineral Resources and Mineral Reserves;
- the estimated amount of CO2 removal per tonne of rock;
- the PFS representing a viable development option for the Project;
- estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
- the estimated amount of future production, both produced and sold;
- timing of disclosure for the PFS and recommendations from the Special Committee;
- the Company’s competitive position in Brazil and demand for potash; and,
- estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
- the presence of and continuity of resources and reserves at the Project at estimated grades;
- the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
- the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
- the capacities and durability of various machinery and equipment;
- the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
- appropriate discount rates applied to the cash flows in the economic analysis;
- tax rates and royalty rates applicable to the proposed mining operation;
- the availability of acceptable financing under assumed structure and costs;
- anticipated mining losses and dilution;
- reasonable contingency requirements;
- success in realizing proposed operations;
- receipt of permits and other regulatory approvals on acceptable terms; and
- the fulfilment of environmental assessment commitments and arrangements with local
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
For additional information please contact:
Cristiano Veloso, Founder, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.verde.ag | www.investor.verde.ag
[1] See “Verde’s Products Remove Carbon Dioxide From the Air”: https://investor.verde.ag/verdes-products-remove-carbon-dioxide-from-the-air/
[2] For further information, see: Asia // The Experience Co., Africa, Heads, JWT, Dentsu, and W/Brasil.
[3] For further information, see: https://grupodeplanejamento.com/
[4] ESPM’s Accreditations & Rankings: https://international.espm.br/accreditations-rankings/
[5] See “Verde to Sell Carbon Credits”: https://investor.verde.ag/verde-to-sell-carbon-credits/
[6] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
[7] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/
[8] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf
[9] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[10] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral
(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q2 2023: C$1.00 = R$3.76)
Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce its financial results for the second quarter ended June 30, 2023 (“Q2 2023”).
“We are reassured by Verde’s renewed net profit despite the most challenging fertilizer market conditions in recent years. Brazilian farmers have grappled with the convergence of the highest interest rates since 2006 and their dependence on credit. This peaked in Q2 2023, period when farmers must acquire inputs for the upcoming planting season, a challenge compounded by the dip in agricultural commodity prices exactly when their crops should be marketed. In this extraordinary context, foreign fertilizer companies with lower capital cost can offer better terms to Brazilian farmers, who have a difficult choice between the products they want to buy and the ones they can afford to finance”, commented Cristiano Veloso, Founder, President & CEO of Verde.
Q2 2023 Financials
- Sales of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”) by volume in Q2 2023 were 107,000 tonnes, compared to 202,000 tonnes in Q2 2022.
- Revenue in Q2 2023 was $10.3 million, compared to $24.9 million in Q2 2022.
- Cash and trade receivables held by the Company in Q2 2023 were $23.8 million, compared to $22.1 million in Q2 2022
- EBITDA before non-cash events in Q2 2023 was $2.1 million, compared to $10.8 million in Q2 2022.
- Total non-current assets in Q2 2023 were $69.6 million, compared to $40.9 million in Q2 2022.
- Net profit in Q2 2023 was $0.2 million, compared to a $9.6 million profit in Q2 2022.
- In Q2 2023, 8,480 million tonnes of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride (“KCl”) fertilizers.[1] A total of 129,682 tonnes of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production.[2]
“Amidst this landscape of market downturns, we acknowledge the potential for even greater performance in this quarter had Verde been able to compete on level ground with companies boasting larger financial resources and consequentially better credit terms for farmers. Achieving a profitable quarter in the face of adversities underscores our Company’s resilience and ability to navigate intricate markets, demonstrating our capacity to not only survive but also thrive under conditions where smaller players would often falter.”, stated Mr. Veloso.
“Currently, the agricultural market is showing early signs of recovery. Agricultural commodity prices are no longer experiencing a rapid decline and interest rates in Brazil have started to decrease from their elevated levels. We anticipate that these shifts will soon mitigate the extraordinary distortions that temporarily favoured competitors with lower capital costs, thereby easing the challenges of this competitive market environment,” concluded.
Subsequent Events
- In July 2023, the Company announced the carbon capture properties of its Products as detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist. The carbon dioxide (“CO2”) capture is inherent to the Products and is estimated at 120kg per tonne. The CO2removal does not require any change to the Products’ production and farmland application methods, nor does it change the nutritional benefits to plants. As a result, in the production scenario of 50Mtpy,[3] Verde would be one of the world’s largest carbon capture projects with a total of 6 million tonnes of CO2 permanently subtracted from the atmosphere every year.
- In July 2023, Verde announced that it is in advanced negotiations to sell carbon credits to major international corporations that are established purchasers of permanent carbon offset. Currently, carbon credits for permanent carbon offset similar to Verde’s are being sold at prices up to US$500 per tonne.[4]
Market Overview
Commodity Prices
The agricultural commodities market has been experiencing significant fluctuations on a downward trend for the last months, impacting the fertilizers’ market worldwide. The table below shows the shifts in the price of some of the main commodities in Brazil:
2022-2023 variance in Brazilian commodities prices (% R$)[5]
Month |
YoY ∆ |
Soybeans |
Coffee |
Corn |
Cotton |
January |
-1% |
-32% |
-10% |
-22% |
February |
-11% |
-24% |
-11% |
-25% |
March |
-19% |
-14% |
-15% |
-31% |
April |
-22% |
-12% |
-16% |
-40% |
May |
-29% |
-18% |
-33% |
-51% |
June |
-30% |
-30% |
-36% |
-47% |
July |
-23% |
-38% |
-33% |
-37% |
H1 (Jan/Jun) ∆ |
-19% |
-22% |
-20% |
-36% |
Notably:
- Soybean: Average price experienced a 19% decline in H1 2023 compared to H1 2022, and a further decrease of 27% in Q2 2023 compared to Q2 2022.
- Corn: Average price experienced a 20% decline in H1 2023 compared to H1 2022, and a further decrease of 28% in Q2 2023 compared to Q2 2022.
- Coffee: Average price experienced a 22% decline in H1 2023 compared to H1 2022, and a decrease of 20% in Q2 2023 compared to Q2 2022.
- Cotton: Average price experienced a 36% decline in H1 2023 compared to H1 2022, and a further decrease of 46% in Q2 2023 compared to Q2 2022.
Brazilian Economy
On August 5, 2023, the Central Bank of Brazil (the “Bank”) lowered its monetary policy interest rate (“SELIC”) by 0.5%, from 13.75% to 13.25%.[6] On August 7, 2023, the Boletim Focus, a weekly report released by the Bank and representing the collective outlook of financial institutions regarding crucial economic indicators, projected that the SELIC rate will reach 11.75% per annum by the end of 2023.
The most recent instance of the Bank reducing the SELIC occurred in August 2020, when the rate decreased from 2.25% to 2% per annum as a response to the economic downturn induced by the COVID-19 pandemic. Following this, the Monetary Policy Committee (“Copom”) of the Bank initiated a sequence of 12 consecutive rate hikes, commencing in March 2021. This series unfolded against the backdrop of escalating prices in essential commodities like food, energy, and fuel. Since August of the preceding year, the rate has remained fixed at 13.75% per annum for seven consecutive periods[7].
Looking ahead to the conclusion of 2024, the projection envisages a decline in the SELIC rate to 9% per annum. Both 2025 and 2026 are forecasted to witness a rate of 8.5% per annum.[8]
The latest economic activity indicators consistently align with a scenario of deceleration. Annual inflation has eased to 3.99% in the last 12 months.[9] The table below provides an overview of the SELIC rates spanning from 2018 to 2023, along with the projections for 2024, 2025 and 2026.
SELIC interest rates[10]
Year |
Selic Rate at year end |
2017 |
7.00% |
2018 |
6.50% |
2019 |
4.50% |
2020 |
2.00% |
2021 |
9.25% |
2022 |
13.75% |
Current rate |
13.25% |
2023 Forecast |
11.75% |
2024 Forecast |
9.00% |
2025 Forecast |
8.50% |
Agricultural Inputs Market and Credit Crunch
The current agricultural market landscape presents enormous challenges. We are observing exceptional and extreme circumstances characterized by a sharp depletion of farmers’ working capital due to a significant plunge in agricultural commodity prices, occurring precisely when farmers are ready to bring their crops to market.
As the prices of commodities initiated their downward trajectory in 2023, many farmers chose to delay their crop sales, anticipating a market rebound that would fetch more favourable prices. Unfortunately, the market continued to witness a persistent decline in commodity prices.
This convergence aligns precisely with the timeframe when farmers need to buy essential agricultural inputs, including fertilizers, for the upcoming planting season. Consequently, farmers are grappling with challenges in financing their planting activities.
As a result, they opt to procure inputs from suppliers that provide extended payment terms, combined with the most competitive interest rates achievable. This strategy enables them to cover the expenses associated with these inputs after generating revenue from the imminent harvest, usually spanning a period of 9 to 12 months.
Global Market Competition and Financing
Amidst the most challenging conditions experienced by the fertilizer market in recent years, we are grappling with a convergence of two critical factors: the highest interest rates since 2006 and the pressing credit requirements of farmers. These farmers are facing the dilemma of diminished working capital just when they need to acquire inputs for the imminent planting season. This challenge stems from the notable decline in agricultural commodity prices, which coincides with the period when their crops are due to be marketed.
Verde’s average cost of debt is 16.6%[11]. To incentivize sales, Verde offers its customers a credit line that charges a spread to its finance cost to comprise operational costs, provisions, and bad debt, leading to an average lending cost of 18.6% for credit-based purchases. The Company’s ability to provide financing with longer tenors is considerably lower compared to international players[12], which translates into less competitive terms for its customers. Unlike its competitors, Verde does not have the option to incur most of its cost of debt in US dollar-denominated liabilities. Overall, the Company is not able to provide financing for more than 20% of its revenue due to constraints related to lines of credit.
On the other hand, Verde’s international competitors benefit from significantly lower financing costs within their respective countries, along with larger financial capacities. This enables them to provide more attractive interest rates and commercial conditions to farmers, effectively conferring them a competitive advantage, as depicted in the following table, which compares major NPK producers and trading companies’ finance costs to Verde’s:
Comparative Proxy of Finance Costs Between International Major Players and Verde[13],[14]
Company |
Cost of Finance (% annual rate in local currency) |
Cargill |
5.0% |
Nutrien |
5.2% |
Bunge |
5.2% |
Mosaic |
5.7% |
Yara |
6.2% |
Verde (Average cost of debt) |
16.6%[15] |
In this context, the competition within the agricultural inputs market grows more intense, and Verde’s capacity to offer competitive credit terms faces constraints due to its higher cost of debt relative to its larger competitors.
The convergence of all the aforementioned factors during a specific timeframe within crop cycles characterizes the current scenario as an atypical and extreme circumstance for Verde and for the agricultural sector in general.
Average KCl Price
The price of potassium chloride (KCl) has exhibited a consistent downward trend since H2 2022. The Average KCl CFR declined by 67% in Q2 2023, compared to Q2 2022, with a sharp 40% decrease from January to July 2023.
The table below compares Brazil’s monthly average KCl CFR prices from 2022 to 2023:
KCl Brazil CFR average spot price (US$)[16]
Month |
2022 |
2023 |
YoY |
January |
772 |
510 |
-34% |
February |
781 |
498 |
-36% |
March |
1,018 |
463 |
-54% |
April |
1,183 |
415 |
-65% |
May |
1,113 |
366 |
-67% |
June |
1,030 |
333 |
-68% |
July |
943 |
328 |
-65% |
August |
883 |
– |
– |
September |
711 |
– |
– |
October |
624 |
– |
– |
November |
571 |
– |
– |
December |
513 |
– |
– |
Exchange Rate
The fluctuation in the exchange rate between the US dollar and the Brazilian Real during the quarter also influences the Company’s results. As the US dollar weakened by 10% against the Brazilian Real during the year, Verde’s sales revenue, priced based on potassium chloride, suffered a decline when converted to Brazilian Real.
Canadian dollar devaluated by 6% versus Brazilian Real in Q2 2023, with and average exchange rate of R$3.76 in the quarter, compared to R$3.99 in Q2 2022.
Mr. Veloso commented: “The confluence of these numerous factors gives rise to an exceptional scenario, not only for Verde but also for the broader agricultural sector. It is crucial to highlight though that these market conditions would not present the same level of challenge to us if it were not for the constraints on farmers’ working capital”.
Selected Annual Financial Information
The table below summarizes Q2 2023 financial results compared to Q2 2022:
All amounts in CAD $’000 |
3 months ended
Jun 30, 2023 |
3 months ended
Jun 30, 2022 |
6 months ended
Jun 30, 2023 |
6 months ended
Jun 30, 2022 |
Tonnes sold ‘000 |
107 |
202 |
215 |
314 |
Average Revenue per tonne sold $ er tonne sold |
96 |
123 |
99 |
115 |
Average Production cost per tonne sold $ |
(18) |
(26) |
(26) |
(25) |
Average Gross Profit per tonne sold $ s fit per t |
79 |
97 |
74 |
90390 |
Gross Margin |
81% |
79% |
74% |
78% |
|
|
|
|
|
Revenue |
10,305 |
24,861 |
21,430 |
36,165 |
Production costs i(1) on costs |
(1,914) |
(5,332) |
(4,623) |
(7,987) |
Gross Profit |
8,391 |
19,529 |
16,807 |
28,178 |
Gross Margin |
81% |
79% |
78% |
78% |
Sales and marketing expenses |
(1,124) |
(1,070) |
(2,331) |
(2,028) |
Product delivery freight expenses |
(3,723) |
(7,040) |
(7,590) |
(10,013) |
General and administrative expenses |
(1,442) |
(655) |
(2,814) |
(1,696) |
EBITDA (2) |
2,102 |
10,764 |
4,072 |
14,441 |
Share Based and Bonus Payments (Non-Cash Event)(3) |
144 |
(40) |
116 |
(104(1(104)) |
Depreciation, Amortisation and P/L on disposal of plant and equipment (3) |
(968) |
(38) |
(1,880) |
(64) |
Operating Profit after non-cash events |
1,278 |
10,686 |
2,308 |
14,273 |
Interest Income/Expense (4) |
(951) |
(245) |
(1,993) |
(4(430) |
Net Profit before tax |
327 |
10,441 |
315 |
13,843 |
Income tax (5) |
(86) |
(816) |
(182) |
(1,18(1,186)) |
Net Profit |
241 |
9,625 |
133 |
12,657 |
|
|
|
|
|
|
(1) – C$1,770,000 of depreciation in 2023 related to the investments made in Plant 1, Plant 2 and access routes improvement in the last 12 months that are included in production costs in the financial statements have been reclassified to a non-cash event in the MD&A.
(2) – Non GAAP measure.
(3) – Included in General and Administrative expenses in financial statements.
(4) – Please see Summary of Interest-Bearing Loans and Borrowings notes.
(5) – Please see Income Tax notes.
External Factors
Revenue and costs are affected by external factors including changes in the exchange rates between the US$, C$ and R$ along with fluctuations in potassium chloride spot CFR Brazil, agricultural commodities prices, interest rates, among other factors.
For further details, please refer to the Market Overview section (page 03):
Q2 2023 compared with Q2 2022
EBITDA and EPS
The Company had an EBITDA of $2,102,000 in Q2 2023, compared to $10,764,000 in Q2 2022. This decrease can be mainly attributed to the factors below, outlined in greater detail within the Market Overview section (please refer to page 03):
- Extreme market conditions and working capital crunch: The current agricultural market scenario is characterized by extreme challenges, including a working capital crunch for farmers due to low agricultural commodity prices and financial market instability. Farmers are encountering difficulties in financing planting activities and are opting for extended payment terms with competitive interest rates from suppliers.
- Intensified competition and credit constraints: Larger international competitors benefit from lower financing costs within their countries and possess larger balance sheets. These advantages enable them to extend more appealing interest rates and favourable commercial terms to farmers when supplying products, giving them a distinctive competitive edge.
Verde’s capacity to offer competitive credit terms to farmers encounters limitations due to the Company’s higher cost of debt compared to these well-established competitors. This financial discrepancy impairs Verde’s ability to match the financing terms offered by its competitors, impacting its appeal to farmers seeking more favourable credit options. The convergence of these factors magnifies the challenge posed by the extreme agricultural market conditions outlined earlier.
- Potassium chloride price decline: The average price of KCl CFR Brazil experienced a substantial 67% decrease in the quarter, with a sharp 40% decrease from January to July 2023.
- Exchange rate fluctuations: The fluctuation in the US dollar to Brazilian Real exchange rate during the quarter also impacted the Company’s results. As the US dollar depreciated by 10% against the Brazilian Real during the year, the value of sales in Brazilian Real prices decreased.
- Shift in product mix due to constrained working capital: With many farmers facing restricted cash flows, there has been a noticeable shift towards opting for lower-value-added products. Consequently, the utilization of micronutrients, which do not fall within the essential NPK elements for plants, has witnessed a reduction. This shift has culminated in a decrease in the sales proportion of BAKS, Verde’s higher-margin product, from 15% to 8% in the second quarter of 2023.
Basic earnings per share was $0.005 for Q2 2023, compared to earnings of $0.189 for Q2 2022.
Product Sales
Sales by volume decreased by 47% in Q2 2023, to 107,000 tonnes sold, compared to 202,000 tonnes sold in Q2 2022, due to the circumstances summarized below. This decrease can be mainly attributed to the factors below, outlined in greater detail within the Market Overview section (please refer to page 03):
- Extreme market conditions and working capital crunch: The agricultural market faces unprecedented challenges, driven by low commodity prices and financial instability. Farmers struggle to secure financing for planting activities, leading them to opt for extended payment terms from suppliers, combined with the most competitive interest rates achievable.
- Intensified competition and credit constraints: Verde’s international competitors benefit from lower financing costs and larger balance sheets, allowing them to offer better credit terms to farmers. Verde’s higher cost of debt limits its ability to match these offers, accentuating the challenge posed by extreme market conditions.
- Potassium chloride price decline: The average price of Potassium Chloride (KCl) CFR Brazil saw a significant 67% decline in the quarter, with a sharp 40% drop from January to July 2023.
- Exchange rate fluctuations: Shifting exchange rates, with the US dollar depreciating by 10% against the Brazilian Real, impacted Verde’s sales value in Brazilian Real prices.
The conjunction of these factors brought specific challenges for Verde and impacted its Product sale during the quarter.
Revenue
Revenue from sales decreased by 59% in Q2 2023, to $10,305,000 from the sale of 107,000 tonnes of Product, at average $96 per tonne sold; compared to $24,861,000 in Q2 2022 from the sale of 202,000 tonnes of Product, at average $123 per tonne sold.
Average revenue per tonne excluding freight expenses (FOB price) decreased by 31% in Q2 2023, to $61 compared to $88 in Q2 2022 mainly due to the decrease in Potassium Chloride CFR Brazil, from US$1040-US$1270 per tonne in Q2 2022 to US$315-US$430 per tonne in Q2 2023.[17] This reduction was partially offset by the 6% appreciation of the Brazilian Real against the Canadian Dollar.
Production costs
Production costs include all direct costs from mining, processing, and the addition of other nutrients to the Product, such as Sulphur and Boron. It also includes the logistics costs from the mine to the plant and related salaries.
Verde’s production costs and sales price are based on the following assumptions:
- Micronutrients added to BAKS® increase its production cost, rendering K Forte® less expensive to produce.
- Production costs vary based on packaging type, with bulk packaging being less expensive than Big Bags.
- Plant 1 produces K Forte® Bulk, K Forte® Jumbo Bag (sold in 1-tonne bags), BAKS® Bulk, and BAKS® Jumbo Bag, while Plant 2 exclusively produces K Forte® Bulk. Therefore, Plant 2’s production costs are lower than Plant 1’s costs, which produces two types of Products and offers two types of packaging options each.
The table below shows a breakdown of full year 2023 Verde’s production costs projection for BAKS® and K Forte®, and what percentage of those costs is not controllable by management:
|
(+) |
(+) |
(=) |
|
Cost per tonne of product projected for 2023[18] (C$) |
Cash cost |
Assets depreciation |
Total cost expected for 2023[19] |
Non-controllable costs (% of total costs) |
K Forte® Bulk (Plant 1) |
20.2 |
3.8 |
24.0 |
61% |
K Forte® Bulk (Plant 2) |
10.2 |
2.8 |
13.0 |
58% |
K Forte® Jumbo Bag (Plant 1) |
30.4 |
2.8 |
33.2 |
71% |
BAKS® (2%S 0.2%B)[20] Bulk (Plant 1) |
42.1 |
3.8 |
45.9 |
81% |
BAKS® (2%S 0.2%B) Jumbo Bag (Plant 1) |
51.3 |
3.8 |
55.0 |
85% |
Verde calculates its total production costs as a weighted average of the production costs for BAKS® and K Forte®, taking into account the production site and packaging type for each product. Therefore, comparing the Company’s production costs on a quarter-over-quarter basis may not be meaningful due to the varying proportions of the cost factors that impact each quarter.
Production costs decreased by 64% in Q2 2023, to $1,914,000 compared to $5,332,000 in Q2 2022. Average cost per tonne decreased by 32% in Q2 2023, to $18 compared to $26 in Q2 2022.
Despite a 47% decrease in sales volume, to 107,000 tonnes in Q2 2023 compared to 202,000 tonnes in Q2 2022, the average production cost in Brazilian Reais decreased to R$66.73 in Q2 2023, compared to R$105.18 in Q2 2022, excluding cost depreciation.
This cost reduction can be mainly attributed to changes in the sales mix of packaging type, with a decrease in the percentage of Products sold in Jumbo Bags to 21% in Q2 2023, compared to 39% in Q2 2022.
Similarly, the sales mix between BAKS® and K Forte® also underwent a shift, with the percentage of BAKS® sales decreasing to 8% in Q2 2023, compared to 15% in Q2 2022, as many farmers are opting for lower-value-added products, due to restricted cash flows. Consequently, the utilization of micronutrients, which do not fall within the essential NPK elements for plants, has witnessed a reduction.
Sales Expenses
CAD $’000 |
3 months ended
Jun 30, 2023 |
3 months ended
Jun 30, 2022 |
6 months ended
Jun 30, 2023 |
6 months ended
Jun 30, 2022 |
Sales and marketing expenses |
(1,030) |
(711) |
(2,100) |
(1,533) |
Fees paid to independent sales agents |
(94) |
(359) |
(231) |
(495) |
Total |
(1,124) |
(1,070) |
(2,331) |
(2,028) |
Sales and marketing expenses
Sales and marketing expenses include employees’ salaries, car rentals, travel within Brazil, hotel expenses, and the promotion of the Product in marketing events.
Sales and marketing expenses increased by 45% in Q2 2023 to $1,030,000 compared to $711,000 in Q2 2022.
This increase can be primarily attributed to the implementation of a field sales team, which resulted in expenses related to salaries car rentals and travel. Additionally, the Company made additional investments in events and media, as part of its sales strategy.
Fees paid to independent sales agents
As part of Verde’s marketing and sales strategy, the Company pays out commissions to its independent sales agents.
Fees paid to independent sales agents decreased by 74% in Q2 2023, to $94,000 compared to $359,000 in Q2 2023, in accordance with the decrease in revenue for the quarter.
Product delivery freight expenses
Product delivery freight expenses decreased by 47% in Q2 2023, to $3,723,000 compared to $7,040,000 in Q2 2022. This reduction can be attributed to the lower sales volume on a Cost Insurance and Freight (CIF) basis, which decreased to 73,000 tonnes in Q2 2023, down from 138,000 tonnes in Q2 2022. Notably, the volume sold as CIF as a percentage of the total sales in the quarter remained stable at 68% during this period.
In Q2 2023, the average freight cost per tonne of the product sold on a CIF basis was $34.53, slightly lower compared to $34.81 in the previous year.
General and Administrative Expenses
CAD $’000 |
3 months ended
Jun 30, 2023 |
3 months ended
Jun 30, 2022 |
6 months ended
Jun 30, 2023 |
6 months ended
Jun 30, 2022 |
General administrative expenses |
(888) |
(389) |
(1,809) |
(799) |
Legal, professional, consultancy and audit costs |
(290) |
(77) |
(607) |
(488) |
IT/Software expenses |
(231) |
(185) |
(343) |
(390) |
Taxes and licenses fees |
(33) |
(4) |
(56) |
(19) |
Total |
(1,442) |
(655) |
(2,814) |
(1,696) |
General administrative expenses
These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in Brazil.
General administrative expenses increased by 128% in Q2 2023, to $888,000 compared to $389,000 in Q2 2022. This increase can primarily be attributed to severance costs, with an expected cumulative annual cost reduction of $588,000.
Furthermore, in Q2 2023, the Company set aside a bad debt provision of $25,000, within the total revenue of $75,000,000 generated over the preceding 12 months. As outlined in Verde’s sales policy, any outstanding customer payments overdue for more than 12 months are required to be provisioned.
Legal, professional, consultancy and audit costs
Legal and professional fees include legal, professional, consultancy fees along with accountancy, audit and regulatory costs. Consultancy fees are consultants employed in Brazil, such as accounting services, patent process, lawyer’s fees and regulatory consultants.
Expenses increased by 278% in Q2 2023, to $290,000 compared to $77,000 in Q2 2022. The primary reason for this increase can be attributed to higher expenditures linked to the Company’s re-domiciliation to Singapore. This transition encompassed the engagement of Singaporean accounting, auditing, legal, and corporate secretariat service firms as third-party corporate support providers after July 2022.
IT/Software expenses
IT/Software expenses include software licenses such as Microsoft Office, Customer Relationship Management (CRM) software and enterprise resource planning (ERP).
Expenses increased by 25% in Q2 2023, to $231,000 compared to $185,000 in Q2 2022, primarily due to higher license expenses related to the Company’s new ERP system, SAP Business One, which was implemented in H2 2022.
Taxes and licences
Taxes and licence expenses include general taxes, product branding and licence costs.
Expenses increased in Q2 2023, to $33,000 compared to $4,000 in Q2 2022 and increase of $29,000. This increase was mainly driven by the application of federal taxes on the Company’s financial revenues. Additionally, in Q2 2023, there were reclassifications of tax expenses that had been inaccurately categorized as costs to General and Administrative expenses, aiming to align with proper accounting standards.
Share Based, Equity and Bonus Payments (Non-Cash Events)
These costs represent the expense associated with stock options granted to employees and directors along with equity compensation and non-cash bonuses paid to key management.
Share Based, equity and bonus payments costs in Q2 2023 decreased by $184,000 with a credit balance of $144,000 compared to $40,000 expense in Q2 2022. The decrease is a result of the reversal of the Q4 2022 equity compensation of $178,000 which has subsequently been settled with stock options issued to directors rather than share issues.
Liquidity and Cash Flows
For additional details see the consolidated statements of cash flows for the quarters ended June 30, 2023 and June 30, 2022 in the quarterly financial statements.
Cash received from / (used for):
CAD $’000 |
3 months ended
Jun 30, 2023 |
3 months ended
Jun 30, 2022 |
6 months ended
Jun 30, 2023 |
6 months ended
Jun 30, 2022 |
Operating activities |
(3,597) |
8,189 |
(6,874) |
11,473 |
Investing activities |
(329) |
(12,480) |
(2,218) |
(15,862) |
Financing activities |
5,777 |
1,507 |
13,940 |
4,312 |
On June 30, 2023, the Company held cash of $6,227,000, an increase of $4,633,000 on the same period in 2022.
Trade and other receivables increased by 35% in Q2 2023, to $27,749,000 compared to $20,528,000 in Q2 2022. Trade and other payables decreased by 42% in Q2 2023 to $6,912,000 compared to $11,839,000 in Q2 2022.
Q2 2023 Results Conference Call
The Company will host a conference call on Tuesday, August 15, 2023, at 08:00 am Eastern Time, to discuss Q2 2023 results and provide an update. Subscribe using the link below and receive the conference details by email.
Date: |
Tuesday, August 15, 2023 |
Time: |
08:00 am Eastern Time |
Subscription link: |
|
The questions can be submitted in advance through the following link: .
The Company’s first quarter financial statements and related notes for the period ended March 31, 2023 are available to the public on SEDAR at www.sedar.com and the Company’s website at www.investor.verde.ag/.
About Verde AgriTech
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[21] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[22] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[23] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[24].
Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[25]
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/hdn7hqh4kc7hdnps
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
- the estimated amount and grade of Mineral Resources and Mineral Reserves;
- the PFS representing a viable development option for the Project;
- estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
- the estimated amount of future production, both produced and sold;
- timing of disclosure for the PFS and recommendations from the Special Committee;
- the Company’s competitive position in Brazil and demand for potash; and,
- estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
- the presence of and continuity of resources and reserves at the Project at estimated grades;
- the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
- the capacities and durability of various machinery and equipment;
- the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
- appropriate discount rates applied to the cash flows in the economic analysis;
- tax rates and royalty rates applicable to the proposed mining operation;
- the availability of acceptable financing under assumed structure and costs;
- anticipated mining losses and dilution;
- reasonable contingency requirements;
- success in realizing proposed operations;
- receipt of permits and other regulatory approvals on acceptable terms; and
- the fulfilment of environmental assessment commitments and arrangements with local
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
For additional information please contact:
Cristiano Veloso, Founder, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.supergreensand.com | www.verde.ag
[1] Verde’s Product is a salinity and chloride-free replacement for KCl fertilizers. Potassium chloride is composed of approximately 46% of chloride, which can have biocidal effects when excessively applied to soils. According to Heide Hermary (Effects of some synthetic fertilizers on the soil ecosystem, 2007), applying 1 pound of potassium chloride to the soil is equivalent to applying 1 gallon of Clorox bleach, with regard to killing soil microorganisms. Soil microorganisms play a crucial role in agriculture by capturing and storing carbon in the soil, making a significant contribution to the global fight against climate change.
Hermary (Effects of some synthetic fertilizers on the soil ecosystem, 2007), applying 1 pound of potassium chloride to the soil is equivalent to applying 1 gallon of Clorox bleach, with regard to killing soil microorganisms. Soil microorganisms play a crucial role in agriculture by capturing and storing carbon in the soil, making a significant contribution to the global fight against climate change.
[2] 1 tonne of Product (10% K2O) has 0.1 tonnes of K2O, which is equivalent to 0.17 tonnes of potassium chloride (60% K2O), containing 0.08 tonnes of chloride.
[3] For further information on Verde’s NI 43-101 Pre-Feasibility Technical Report, see the press release at: https://investor.verde.ag/wp-content/uploads/2022/05/Verde-AgriTech-Press-Release-Pre-Feasibility-Results-May-16-2022.pdf
[4] Source: Quantum Commodity Inteligence. Enhanced rock weathering credits offered at up to $536/t. Available at: https://www.qcintel.com/carbon/article/enhanced-rock-weathering-credits-offered-at-up-to-536-t-14332.html
[5] Source: Economic Research Center of the ESALQ/University of São Paulo. Available at: https://www.cepea.esalq.usp.br/br/indicador/soja.aspx
[6] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/detalhenoticia/17942/nota
[7] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/estatisticas/grafico/graficoestatistica/metaselic
[8] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/publicacoes/focus/25112022
[9]Source: Brazilian Institute of Geography and Statistics (IBGE). Available at: https://www.ibge.gov.br/explica/inflacao.php
[10] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/en
[11] Considers average cost of debt related to working capital loans with maturity from September 2023 onwards as of Q2 2023.
[12] Verde has an average of 93 days of receivables, while competitors can provide 180-360 days to collect its payments.
[13] Source: Bloomberg, as of July 24th, 2023.
[14] Considers each Company most traded bond, which differs considerably from Verde’s tenors. This is likely to imply that large international players have an even lower cost of finance.
[15] Considers average cost of debt related to working capital loans with maturity from September 2023 onwards as of Q2 2023.
[16] Acerto Limited Report.
[17] Source: Acerto Limited Report.
[18] The costs were estimated based on the following assumptions: Costs in line with Verde’s 2023 budget. Sales volume of 1.0Mt per year. Crude Oil WTI (NYM U$/bbl) = US$80.00. Diesel price = U$$1.26. Currency exchange rate: US$1.00 = R$5.25; C$1.00 = R$4.20. Total cost per tonne includes all costs directly related to production and feedstock extraction in addition to assets depreciation.
[19] Total cost per tonne includes labor mining, mining, crushing, processing, maintenance of support facilities, product transportation from mine pits to production plants, laboratory expenses, G&A, and environmental compensation expenses.
[20] BAKS® can be customized according to the crop’s needs, so it can have several compositions. The 2%S 0.2%B composition is responsible for most of Verde’s sales.
[21] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
[22] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/
[23] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf
[24] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[25] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral
Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it is in advanced negotiations to sell carbon credits to major international corporations that are established purchasers of permanent carbon offset. Currently, carbon credits for permanent carbon offset similar to Verde’s are being sold at prices up to US$500 per tonne.[1] The Company is able to generate up to 300,000 tonnes of carbon credit annually via its existing production facilities.
Verde’s silicate rock is rich in the mineral glauconite (the “Rock”), which once processed and applied to the soil removes carbon dioxide (“CO2“) from the air through a process called Enhanced Rock Weathering (“ERW”).[2] ERW permanently locks CO2 into the new mineral structure.[3] In 2022 the carbon credit markets totalled US$ 909 billion in transactions.[4]
The Company is fully permitted and equipped to mine and process up to 2.8 million tonnes per year of Rock. To build its mines, Verde acquired farmland that had previously been deforested to open area for pastureland, as its mining progresses Verde fully recovers the land back to original native forests. To date, the Company has planted over 30,000 native and endangered trees.
Verde expects to close its first sales of carbon credit in Q3 2023.
About Verde AgriTech
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[5] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[6] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[7] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[8].
Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[9]
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/3tv6fma5vq3wsxmn
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
- the estimated amount and grade of Mineral Resources and Mineral Reserves;
- the PFS representing a viable development option for the Project;
- estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
- the estimated amount of future production, both produced and sold;
- timing of disclosure for the PFS and recommendations from the Special Committee;
- the Company’s competitive position in Brazil and demand for potash; and,
- estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
- the presence of and continuity of resources and reserves at the Project at estimated grades;
- the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
- the capacities and durability of various machinery and equipment;
- the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
- appropriate discount rates applied to the cash flows in the economic analysis;
- tax rates and royalty rates applicable to the proposed mining operation;
- the availability of acceptable financing under assumed structure and costs;
- anticipated mining losses and dilution;
- reasonable contingency requirements;
- success in realizing proposed operations;
- receipt of permits and other regulatory approvals on acceptable terms; and
- the fulfilment of environmental assessment commitments and arrangements with local
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
For additional information please contact:
Cristiano Veloso, Founder, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.verde.ag | www.investor.verde.ag
[1] https://www.qcintel.com/carbon/article/enhanced-rock-weathering-credits-offered-at-up-to-536-t-14332.html
[2] See “Verde’s Products Remove Carbon Dioxide From the Air”, Verde AgriTech. Available at: https://investor.verde.ag/verdes-products-remove-carbon-dioxide-from-the-air/
[3] See e.g. Criteria for High-Quality Carbon Dioxide Removal (microsoft.com), page 36.
[4] “Global carbon markets value hit record $909 bln last year”, VERMA, S.; CHESTNEY, N. Reuters, 2023. Available at: https://www.reuters.com/business/sustainable-business/global-carbon-markets-value-hit-record-909-bln-last-year-2023-02-07/
[5] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
[6] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/
[7] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf
[8] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[9] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral
Independent research shows potential carbon capture of 120kg per tonne of Verde’s Products
Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce the carbon capture properties of its K Forte® and Super Greensand® (“Products”), as detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist (the “Study”). The carbon dioxide (“CO2”) capture is inherent to the Products and is estimated at 120kg per tonne. The CO2 removal does not require any change to the Products’ production and farmland application methods, nor does it change the nutritional benefits to plants. As a result, in the production scenario of 50 million tonnes per year (“Mtpy”),[1] Verde would be one of the world’s largest carbon capture projects with a total of 6 million tonnes of CO2 permanently subtracted from the atmosphere every year.
The Science on Enhanced Rock Weathering and the Study Findings
Enhanced Rock Weathering (“ERW”) is a naturally occurring process whereby CO2 is removed from the atmosphere when it reacts with silicate minerals present within certain types of rocks. In other words, through weathering, certain types of minerals naturally absorb CO2 from the air and store it permanently as part of the new mineral structure.
Over many years, Verde’s prospecting led to the identification of a silicate mineral that is rich in glauconite (the “Rock”). It is distinctive in its faster weathering rate compared to other minerals used in ERW schemes, such as basalt, which allows the Rock to capture CO2 more rapidly. In a parallel benefit, the Rock is a source of several plant nutrients including potassium (represented on the periodic table as “K“), which is a crucial element for plant growth, and is a proven substitute for Potassium Chloride (“KCl”).
To evaluate Verde’s Products, the Company engaged Professor David Manning Ph.D., who is a leading expert in ERW. Dr. Manning has been a member of the Institution of Geologists since 1979, was the president of the Geological Society of London from 2014-2016, member of Council of the European Federation of Geologists (“EFG”) and chaired the EFG’s Panel of Experts on Soil Protection. He has extensive publications on the topic of soil and its role in combating climate change.[2],[3]
Analyses performed on Verde’s Products at Newcastle University have confirmed its efficiency to extract CO2 from the atmosphere at a ratio of 120kg of CO2 per 1 tonne of Product, based on a well-established scientific calculation formula.[4] In conclusion, Verde’s Rock undergoes ERW to permanently capture atmospheric CO2 while releasing K and other plant nutrients.
Previously, following extensive geological research of the Rock, including over 40,000 meters of drilling and chemical analyses, Verde had commissioned an independent mineral resource and reserve study under the Canadian National Instrument 43-101, which has established a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[5] This amounts to 295.70 million tonnes of potash equivalent in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million.[6]
Professor David Manning commented on the findings: “For over 40 years I have devoted the bulk of my research to how we can exploit soil processes to mitigate the effects of anthropogenic greenhouse gas emissions. More specifically, I use my research-based understanding of how soils and their constituent minerals interact with the biosphere in the context of carbon capture and plant nutrient supply. It was therefore no surprise when our research demonstrated the potential of Verde’s Products to absorb CO2. More impressive is Verde’s total mineral resources’ potential to remove around 398 million tonnes of CO2 from the atmosphere,[7] in what will be a significant contribution to global efforts to reduce atmospheric CO2 levels.”
Verde’s ERW Carbon Capture Potential
Scalable and cost-effective ERW carbon capture projects depend on farmers’ willingness to apply minerals on a large scale over their farmland. In that sense, Verde’s has multiple advantages in ERW:
- The Products have fast dissolution rate, as evidenced by agronomic trials and potassium release.
- The Products are sources of essential macronutrients for plants, which creates significant motivation for farmers to adopt them in place of traditional chemical fertilizers;
- The Products have certified mineral reserves proving reliably consistency in their mineralogy, carbon capture effectiveness and absence of deleterious elements;
- The Products are certified organic by several governmental and non-governmental organizations, including some of the most stringent global standards such as the Washington State Fertilizer Registration and the California Department of Food & Agriculture;
- The Products undergo meticulous particle size control when of its manufacturing process, guaranteeing a consistent particle size distribution. This is advantageous because particle size is essential for optimal carbon capture and its calculation.
Few carbon capture projects based on ERW showcase all, if any, of the above advantages which are consistently delivered by Verde.
Cristiano Veloso, Verde’s Founder and CEO, commented: “This is a disruptive moment for agriculture in general and Verde in particular because it marks the point when plant nutrition can be directly and quantifiably linked to permanent carbon capture. As a company and team, at Verde we have always been committed to sustainable and environmentally friendly solutions for agriculture. We are now devoting significant energy and resources to the Life Cycle Analysis, which will determine our products’ carbon footprint – if there is any and how best to pursue monetization from potential carbon credits. Verde is uniquely positioned to help feed the world and reduce greenhouse gases in our atmosphere.”
Next Step: Life Cycle Analysis and Carbon Credits Studies
Verde has commissioned a leading Canadian consultancy firm to conduct a comprehensive Life Cycle Analysis (LCA) of its Products. The LCA will provide a more complete understanding of the overall carbon footprint of Verde AgriTech’s products, from mining through processing and delivery, thereby allowing for an exact calculation of CO2 captured. The fact that 100% of the electricity used by the Company comes from renewable zero emission hydropower will contribute to ensure a negative carbon footprint.
The Company will also determine how its Products can meet the requirements necessary to generate carbon credits. In 2022 the global market for carbon credits totalled US$ 909 billion.[8]
KCl Compared to Verde’s Product
Potassium chloride (KCl) is the conventional source of potassium, produced mostly in Canada, Russia, and Belarus. Brazil is highly dependent on imported KCl, accounting for over 96% of the total potassium used in the country’s crops. Despite its effectiveness as a potassium fertilizer, the production and use of KCl have resulted in significant environmental and social costs. The manufacturing process of KCl, has been linked to devastating effects, including human fatalities, large-scale water pollution due to chloride contamination, and the formation of sinkholes leading to the destruction of an entire city.
Contrary to KCl, Verde’s Product is economically more viable and sustainable because it does not contain chlorine, has gradual release, does not leach out with rain or irrigation water, and does not cause soil salinization. Verde’s Products have a much smaller carbon footprint compared to KCl because it does not need to be transported over transcontinental distances, being produced close to its finally point of application, rely on electricity produced from renewable sources, and once applied to soils it captures carbon.
In Q1 2023, 8,559 tonnes of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride fertilizers.[9],[10] A total of 121,201 tonnes of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production. Once it achieves the production capacity of 50 million tonnes per year, the Company aims to mitigate the application of approximately 94.5 billion tonnes of chloride into soils over time[11] in collaboration with its customers.
Furthermore, Verde’s Products are produced close to its finally point of application, rely on electricity produced from renewable sources, and once applied to soils they capture carbon.
Finally, KCl is not approved for organic farming due to its harmful impacts on the environment. Its extensive use has been associated with damaging effects on soil health and microbiome balance, as well as contributing to chloride leaching into water systems. Whereas Verde’s products are certified organic.
Verde plans to use carbon credits to reduce the price of the Product to farmers while increasing overall profitability, therefore further incentivizing the substitution of KCl.
Select Historic Overview of Verde’s Environmental Initiatives
Verde has an extensive history of commitments towards sustainable and productive agriculture. Below are some of the highlights of recent years that help ensure that the carbon capture initiative of the Company is buttressed by best-in-class environmental practices.
In September 2019, the Company was awarded the “Good Environmental Practices Award”, promoted by the State System of Environment and Water Resources (SISEMA, in Portuguese) in the category “Best Practice of Mineral Solid Waste Management”. The Company has presented its sustainable mining project that is intended to improve the health of people and of the planet.
In June 2021, the Company launched N Keeper, a proprietary processing technology for the Rock that alters its physical-chemical properties to enable ammonia retention for use as a calibrated additive in Nitrogen fertilizers. N Keeper leads to the reduction of Nitrogen volatilization loss, which provides the efficiency of crop fertilization increase, mitigation of environmental impacts, and reduction of climate changes.[12]
In April 2022, Bio Revolution, Verde’s technology that enables the incorporation of microorganisms to mineral fertilizers, was launched by the Company. K Forte® is the first fertilizer in the world to use Bio Revolution technology. Bacillus aryabhattai, a bacterial strain widely renowned in agriculture for its multiple benefits, is the first microorganism to be incorporated into Verde’s Product.[13]
In February 2022, the Company’s Brazilian subsidiaries, Verde Fertilizantes LTDA and FVS Mineração LTDA, earned ISO 9001 and ISO 14001 certifications.
ISO 9001 is the international standard that specifies requirements for a Quality Management System, demonstrating good management practices throughout the Company’s processes. This certification reflects Verde’s commitment to meeting the highest standards of environmental protection and adopting a responsible approach to environmental issues in our operational activities.
ISO 14001 is an international standard that sets out the requirements for an environmental management system. It helps Verde to improve our environmental performance through more efficient use of resources and reduction of waste.
Through the implementation of the Environmental Management System in accordance with ISO 14000, Verde has established and maintains specific policies and procedures for identifying, monitoring, and controlling the environmental aspects of our operations, with the aim of minimizing negative impacts on the environment, preventing pollution, and promoting sustainability.
Moreover, we continue to actively seek opportunities to improve our environmental performance, through training and awareness programs developed for our employees, as well as the pursuit of technological innovations and more sustainable practices in our operations.
ISO 14001 certification shows Verde’s commitment to protecting the environment and operating transparently and responsibly regarding environmental issues.
Furthermore, Verde’s mining and processing do not require tailings dams. Its mined area is mainly composed of degraded pasturelands that, once mined, Verde transforms into tropical forest. To that end, the Company planted 4,300 trees in 2019, 5,000 in 2020, 9,888 in 2021 and 10,341 in 2022, totaling over 29,500 trees planted. All planted species are native to the region located around the Company’s production area.
Over the past few years, the company has contributed resources to expand production. Since last year, with the start of operation of the second plant, Verde AgriTech has become the company with the largest potash production capacity in Brazil. At 3Mtpy production, which can be achieved at its existing production facilities with issued permits and licenses, Verde can capture 360,000 tonnes of CO2.
In June 2023, Verde’s shareholders voted overwhelmingly to approve the Company’s proposal to ban sales to Amazon Rainforest regions in a commitment to combat deforestation.[14]
About Verde AgriTech
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[15] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[16] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[17] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[18].
Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[19]
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/49z9mmp6zfq8dgak
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
- the estimated amount and grade of Mineral Resources and Mineral Reserves;
- the PFS representing a viable development option for the Project;
- estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
- the estimated amount of future production, both produced and sold;
- timing of disclosure for the PFS and recommendations from the Special Committee;
- the Company’s competitive position in Brazil and demand for potash; and,
- estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
- the presence of and continuity of resources and reserves at the Project at estimated grades;
- the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
- the capacities and durability of various machinery and equipment;
- the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
- appropriate discount rates applied to the cash flows in the economic analysis;
- tax rates and royalty rates applicable to the proposed mining operation;
- the availability of acceptable financing under assumed structure and costs;
- anticipated mining losses and dilution;
- reasonable contingency requirements;
- success in realizing proposed operations;
- receipt of permits and other regulatory approvals on acceptable terms; and
- the fulfilment of environmental assessment commitments and arrangements with local
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
For additional information please contact:
Cristiano Veloso, Founder, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.verde.ag | www.investor.verde.ag
[1] For further information on Verde’s NI 43-101 Pre-Feasibility Technical Report, see the press release at: https://investor.verde.ag/wp-content/uploads/2022/05/Verde-AgriTech-Press-Release-Pre-Feasibility-Results-May-16-2022.pdf
[2] See, generally: https://www.scopus.com/authid/detail.uri?authorId=7201460937
[3] Source: Times Higher Education (THE). “Impact Rankings 2023”. Available at: https://www.timeshighereducation.com/impactrankings
[4] RENFORTH, P. “The negative emission potential of alkaline materials”. Nature Communications,
10:1401, 2019. Available at: https://www.nature.com/articles/s41467-019-09475-5.
[5] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2022. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf
[6] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[7] Verde’s mineral resources consist of a combined measured and indicated mineral resource of 1.47 billion tonnes, along with an inferred mineral resource of 1.85 billion tonnes. In total, Verde possesses 3.32 billion tonnes of rock. Notably, the CO2 extraction ratio for this resource is estimated at 120kg of CO2 per tonne, totalling 398 million tonnes of CO2 removal potential.
[8] VERMA, S.; CHESTNEY, N. “Global carbon markets value hit record $909 bln last year”. Reuters, 2023. Available at: https://www.reuters.com/business/sustainable-business/global-carbon-markets-value-hit-record-909-bln-last-year-2023-02-07/
[9] Verde’s Product is a salinity and chloride-free replacement for KCl fertilizers. 1 tonne of Product (10% K2O) has 0.1 tonnes of K2O, which is equivalent to 0.17 tonnes of potassium chloride (60% K2O), containing 0.08 tonnes of chloride.
Potassium chloride is composed of approximately 46% of chloride, which can have biocidal effects when excessively applied to soils.
According to Heide Hermary (Effects of some synthetic fertilizers on the soil ecosystem, 2007), applying 1 pound of potassium chloride to the soil is equivalent to applying 1 gallon of Clorox bleach, regarding killing soil microorganisms. Soil microorganisms play a crucial role in agriculture by capturing and storing carbon in the soil, making a significant contribution to the global fight against climate change.
[10] 1 tonne of Product (10% K2O) has 0.1 tonnes of K2O, which is equivalent to 0.17 tonnes of potassium chloride (60% K2O), containing 0.08 tonnes of chloride.
[11] Based on the 50Mtpy production scenario of the NI 43-101 Pre-Feasibility Technical Report. See the PFS for further information: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf
[12] See the press release at: https://investor.verde.ag/verdes-n-keeper-technology-to-boost-agricultural-productivity-and-help-fight-climate-change/
[13] See the press release at: https://investor.verde.ag/verde-launches-bio-revolution/
[14] See the press release at: https://investor.verde.ag/verdes-shareholders-to-vote-on-proposal-to-ban-sales-to-amazon-rainforest-regions-in-a-commitment-to-combat-deforestation/
[15] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
[16] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/
[17] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf
[18] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).
[19] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral